Michigan hospitals face financial uncertainty under an auto insurance reform law signed May 30 by Gov. Gretchen Whitmer, according to Crain's Detroit Business.
Senate Bill 1 includes a variable fee schedule for hospitals, which the governor said aims to stop overcharging for injuries related to auto accidents. But Southfield, Mich.-based Beaumont Health and other hospitals in the state are bracing for revenue losses spurred by the bill.
Under the fee schedule, hospitals will receive reimbursement ranging from 200 percent to 240 percent of Medicare rates in 2021 for the costs of treating patients with auto-related injuries, and 195 percent to 235 percent of Medicare the following year, according to Crain's. This falls to 190 percent to 230 percent of Medicare rates in 2023.
According to Crain's, hospitals with Level 1 or 2 trauma centers will receive the higher reimbursement, and hospitals in Detroit, Flint and Saginaw will be reimbursed at 250 percent of Medicare rates.
The law also will allow people to pick their own personal injury protection options with coinciding personal injury protection rate reductions, according to the governor.
Drivers will be able to choose from unlimited personal injury protection medical coverage (10 percent personal injury protection reduction); $500,000 coverage (20 percent personal injury protection reduction); $250,000 coverage (35 percent personal injury protection reduction); and $50,000 coverage for Medicaid-eligible recipients (45 percent personal injury protection reduction).
Seniors or other people with sufficient private insurance will be able to completely opt out (100 percent personal injury protection reduction).
The fee schedule is not slated to take effect until July 1, 2021, but hospitals are unsure if private health plans will pay them for treating patients with auto-related injuries who opted out of personal injury protection coverage on their auto plan, according to Crain's.
Beaumont Health COO Carolyn Wilson estimated her organization could lose a significant amount of money due to the law.
"We have early estimates, and our estimates are concerning for us — in the multiple tens of millions of dollars of loss in revenue for Beaumont Health," she told Crain's. "It will be very significant for us and other health systems in the state of Michigan."
The system — which has eight hospitals, 145 outpatient locations and more than 38,000 employees — will likely be forced to close or downgrade some of its emergency trauma centers in the Detroit area, Ms. Wilson said.
According to Crain's, employers could also face difficulties as they adapt their health insurance plans for employees to the law.
Read the full Crain's report here.
Read more about the law here.
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